Tue 28 Apr. 2015

Does size matter? The reasons for growth and the arguments for and against M&A

The Insurance Institute of London's Young Members committee, in association with Catlin, held the second event of its 2015 Educational and Networking Programme to an audience at Catlin on 28 April 2015. Stephen Catlin, CEO, Catlin Group, offered a personal view on why growth for insurance entities was essential, the differences, benefits and pitfalls between acquisitive and organic growth and the topical issue of M&A.

Stephen’s presentation covered the experiences he has learned in over 40 years working in the insurance market and also the imminent merger between Catlin and XL. He explained that growth and M&A were topics as relevant today as when he started, and it personally affected a large number of people in the market. One aim of his presentation was to offer some views to those who may wish to better understand why it was happening and what to expect from it. He further noted that IIL members may not fully appreciate the benefits of growth for insurance carriers (lower capital requirement relative to written premium, diversification of risk, increased relevance (larger line etc.), shareholder value and so on).

Stephen explained why, having extolled the virtues of organic growth over acquisitive growth, Catlin among so many others has decided to take the M&A route, what potential stumbling blocks await those who take the M&A route, whether this is going to be a continuing trend (if so, are larger, middle-sized or smaller firms more susceptible to M&A) and what the staff can personally expect (opportunity? threat?).

By the end of this lecture members will have gained an insight into:

  • The reasons insurance companies seek growth;
  • The benefits of acquisitive growth over organic growth;
  • The potential pitfalls of acquisitive growth when compared with organic growth;
  • Whether the current trend for M&A is here to stay

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